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PD Online Special: Real Reasons for Decline in Savings Deposits
According to statistics from the People's Bank of China, by the end of May, the balance of China's urban and rural residents' savings deposits was 6219.5 billion yuan, down by 34.1 billion yuan from April, the month seeing the greatest gliding in residents' savings deposits since interest rate was lowered for seven successive times after 1996.
At the end of May, the balance of urban and rural residents' savings deposits nationwide increased 5.5 percent over last year's same period, but the growth rate was 1.6 percentage points lower than that of April. The increase rate of savings deposits has dropped for 13 months from the 19.2 percent in April last year, it had fallen by a total of 13.7 percentage points by the end of this May.
The continuing decline in savings deposits has aroused the concerns of various quarters, some mass media and grassroots banks even attribute this to the credit card system for depositing which came into effect on April 1 this year. Is this the real cause?
Judged from the country's situation, the reasons are not so simple. True, after the change from the registered system into the credit card system for savings deposits, some big savings depositors do have transferred huge sums of their private deposits into the account of their own company. Squeezing public funds out of the privately deposited capital is one of the anticipated aims to be achieved in instituting the credit card system for depositing. This practice ensures that financial statistics are scientific, and the breeding of corruption is brought under control. Of course, here we do not rule out the cases that a small number of depositors who withdrew their deposits for fear that their wealth would be shown off.
However, judged from the information fed back from most parts of the country, residents generally reacted calmly to the implementation of the credit card system, indicating their understanding and acceptance. Financial statistics reveal that deposits by privately owned enterprises and self-employed businessmen declined by 3.7 billion yuan and 1 billion yuan, and rose by 2.1 billion yuan between Jan-March respectively. In April and May, the deposits all assumed a rising trend, respective increases of 4.2 billion yuan and 2.3 billion yuan.
Objectively speaking, the diversion of savings deposits is closely related to the new economic trends, including brisk sales of state treasury bonds, enlivening of the stock market and the warming up again of consumption emerged since the beginning of this year.
In May, residents' savings deposits decreased by 34.1 billion yuan from the previous month, and the growth was down by 94 billion yuan compared with last year's same month, the main reasons for this are that residents are indifferent to the anticipated profits of such financial assets, so they diverted part of the due deposits to other types of investment and consumption.
Firstly, in the first five months of this year, the financial department issued two terms of T-bonds worth 110 billion yuan. Such T-bond has good safety, strong fluidity, and a higher interest rate than that of same-term bank deposits and is exempt from interest tax, so it is the first choice made by many residents for their management of money affairs. According to a report from the Wuhan Branch of the People's Bank of China, a survey conducted by commercial banks reveals that about 50 percent of the state treasury bonds were purchased with residents' due savings deposits.
Secondly, since the beginning of this year, the stock market has been thriving, in particular, the stock price index has been rising after the Spring Festival, the continuous listing of new stocks has drawn huge amounts of new capital into the primary or the secondary market, so far, the number of people opening an account in Shanghai and Shenzhen exchanges has exceeded 50 million. In the first five months, stamp tax collected in these two markets alone had hit 22 billion yuan, approaching the level of the whole of last year. The survey also shows that in the first five months, the funds deposited by stock companies in financial institutions combined to increase by 216.6 billion yuan, 153 billion yuan more than in the same period last year, of which 80.5 billion yuan was increased in May. Here the bulk portion was from the conversion of residents' savings deposits.
Thirdly, the long holidays of the International Labor Day boosted the cash income from the sales of commodities and service trade, which increased by 22 percent and 20 percent respectively, this was the highest value registered in the same period ever since 1996, here we can see the diversion of savings deposits resulting from consumption.
Since the interest rate for bank deposits is relatively low, what people pursue in depositing their money is security and fluidity, therefore the tendency of the diversion of savings deposits will continue in the future. Experts suggest that financial institutions should have full estimation of this tendency and timely take appropriate countermeasure for this and do a good job of stabilizing the source of deposits, prevent and defuse payment risks. (By Peopledaily Online Special Correspondent Shi Mingshen)
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